The Securities and Exchange Commission announced that it filed a civil injunctive action today in federal district court in Massachusetts against Boston Trading and Research, LLC (BTR), and its principals Ahmet Devrim Akyil and Craig Karlis for fraudulently raising approximately $40 million from approximately 750 investors in a purported foreign currency (Forex) trading venture. Among other things, the SEC alleges that the defendants misappropriated some investor funds and lost the vast majority of remaining investor funds through Forex trading activity after promising investors that most of their funds were protected from such trading losses.

The Commission’s complaint alleges that BTR offered investors investments in a program that traded in the Forex market. BTR solicited investments through a website, sales representatives called “introducing brokers,” and live presentations by Karlis and Akyil. BTR attracted investors from around the world, with many residing in Florida. BTR’s representations to investors, included the following: (1) investors would have 100% transparency about what was going on in their accounts through the provision of daily and monthly account statements and twenty-four hour access to real-time trading information regarding the trading that Akyil was doing on their behalf; (2) the BTR trading system was set up with a stop-loss program, so investors could lose no more than an agreed-upon percentage (typically 30%) of their initial investment; and (3) BTR and its principals would be paid from profits only.

The SEC alleges that in fact Karlis and Akyil diverted some investor funds for their own benefit. To conceal the fraud, BTR sent investors misleading account statements, while Akyil and Karlis were actually depleting the investment pool through misappropriation and trading losses.

According to the Complaint, BTR collapsed in September 2008 due to significant losses accrued as a result of concealed trading far past the stop loss limits promised to investors. Ultimately, BTR distributed the remaining funds, which accounted for only approximately 10% of account balances, to its investors.

The Commission’s complaint alleges that BTR, Akyil, and Karlis violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission seeks the entry of a permanent injunction, disgorgement of ill-gotten gains plus pre-judgment interest, and the imposition of civil monetary penalties against BTR, Akyil, and Karlis.

Separately, the U.S. Attorney's Office for the District of Massachusetts today unsealed an indictment charging Akyil and Karlis with criminal violations based on the same misconduct. The SEC acknowledges the assistance of the Commodity Futures Trading Commission in its investigation.